It's the Autonomy, Stupid

Date: Tue, 09/07/2010
Author: Mark Grannis
If there is any silver lining in the fiscal storm clouds that threaten our economic future, it is this: Virtually every candidate for federal office this November will be talking about the importance of reducing federal budget deficits. But ironically, the proposals most likely to lead us back to fiscal responsibility will be the ones that are primarily motivated by something else: the desire to get government off our backs. In short, it's the autonomy, stupid.

Broadly speaking, we can expect "deficit reduction" proposals to fall into three main camps. In one camp we will have the Tax-and-Wait crowd. Their most visible proposals will be to increase taxes, at least on the "rich." They may also propose some spending restraint, like freezing discretionary spending and "paying for" any new spending with offsetting program cuts or tax hikes. But to the Tax-and-Waiters, "restraint" means slower spending growth.

As a result, the Tax-and-Waiters won't really be balancing the budget themselves; they'll be waiting for us to do it, by working harder and producing more income to tax. We are the real deficit reducers in this scenario; we change the deficit equation by working hard enough to boost federal tax receipts.

Opposing the Tax-and-Wait crowd will be the Dieters. The Dieters will treat excessive federal spending the way many of us treat excessive eating: as something we need to moderate but which it's not practical to reduce very much. The Dieters will trim here and there, and they'll be conspicuous in their refusal to pass new spending programs. Unfortunately for the Dieters, we need to cut spending by more than 40 percent to get it down to the level of tax receipts, and the Dieters can't bring themselves to propose that.

Say this for the Dieters, though: They know we need to reduce government spending rather than just sending more Ho-Ho's to Washington. This will lead the Dieters to oppose any measure that raises new tax revenue from any source. But without deep reductions in federal spending, the Dieters are playing almost as much of a waiting game as the Tax-and-Wait crowd. Again, with the Dieters in power, the only real hope for a balanced budget will be for us to balance it, by working harder and producing a larger total output from which government can take its cut.

The third group, by far the smallest, will be the group we can call the Zeros. The Zeros know that we're not supposed to have a budget deficit at all; that when the Treasury gets to zero, Congress is supposed to stop spending. The Zeros also know that zero happens to be the correct amount that should be appropriated for many federal programs. Consequently, the Zeros propose deep cuts in federal spending, driven by the complete elimination of programs that are deemed unnecessary, unhelpful, unconstitutional, or just too expensive. The Zeros would never dream of submitting a ten-year budget showing ten straight deficits, as the other two groups do. If elected in force, Zeros would balance the budget in the very next fiscal year.

Why do the Zeros show so much more fiscal discipline than the other two groups? Largely for reasons that have nothing to do with budget math. Unlike the other two groups, Zeros do not accept the basic premise that government spending is good for us. Zeros don't think of federal spending as a necessity (like the Tax-and-Waiters) or as a sweet-tasting treat (like the Dieters). We Zeros think very little federal spending makes voters better off, and quite a bit of it makes us worse off—not (merely) because we can't afford it but because it interferes with our personal and economic liberty. Zeros find it intolerable that Congress dictates how we work, play, save, invest, hire and fire, and even eat. We're tougher on spending because we think spending would be bad for us even if there were no budget deficit.

Zeros are for reducing taxes as well, because a smaller government requires less revenue. But Zeros aren't allergic to the elimination of special-interest tax credits that have been stuffed into the revenue side of the budget. Unlike Dieters, we object to government coercion in the form of tax credits just as much as we object to government coercion in the form of costly regulatory programs. Given the opportunity to replace the income tax with some other tax that Congress couldn't use to manipulate the economy, many Zeros would jump at the chance.

Every candidate, without exception, will be loudly in favor of fiscal discipline this November. But voters who genuinely want fiscal discipline may get it only if they focus first on liberating our economy from decades of federal micromanagement. It's the autonomy, stupid.